Sachin Bansal’s Navi emerges as one of the top consumer lenders during the pandemic

Over a month ago, Sachin Bansal made a claim that Navi would soon be among the top three lending apps in the country. And looks like his claim has come true. By being one of the few lenders to disburse loans to low-income groups during the pandemic, Navi has now become one of the top lenders.

According to three Entrackr sources, Navi has disbursed loans worth over Rs 130 crore since its launch in May this year, with an entire amount being given since the pandemic began. 

“Navi has disbursed loans to over 40,000-45,000 people in the past four months,” said a person aware of the company’s internal data, on condition of anonymity. While Navi offers loans in the range of Rs 10,000 to Rs 500,000, this person said that the average loan size at Navi hovers between Rs 30,000 to Rs 35000. 

According to Entrackr’s research, only a handful of the consumer lending companies have been disbursing loans to new customers while the demand for credit among low-income groups increased multifold due to job losses and significant erosion of income. This has helped Navi accelerate its scale.

Another factor that has played into this is their aggressive marketing which is visible when one looks at the app download numbers. Sensor Tower data shows that Navi has amassed 1.5 million downloads during the May-August period. Apart from Navi, Dhani is another consumer lender that has been disbursing loans during this period. Dhani has recorded over 7 million downloads during the same time. 

“Navi and Dhani were the only two companies who were marketing aggressively on Google and Facebook. Except both companies, no other consumer lending platform was actually lending to new customers,” said one of the top executives of a leading consumer lending company. The person requested anonymity.

Navi declined to comment on the story.

If we look at total loans disbursed by pure-play consumer lending platforms who largely lend through a mix of their own NBFCs and third party lenders during the pandemic, Navi appears to be the top lenders to new borrowers along with Dhani. 

“With the aggressive lending strategy, Navi has laid out plans to achieve Rs 600-700 crore worth loan book by the end of July-August next year. This would definitely put the company into the top three lending apps after KreditBee and MoneyTap,” said the second source quoted in the story.

Even though Navi has been a new player in the lending space, the company acquired deep insights about the business through Chaitanya. Navi acquired Chaitanya Rural Intermediation Development Services Private Limited or CRIDS in December last year and later rebranded it as Navi Finserv. 

CRIDS has been giving out loans to lower-income groups since 2012. It knows the nitty-gritty of lending business and has a strong presence in states like Karnataka, Jharkhand, Bihar, Maharashtra and Rajasthan. 

This experience has been helping Navi mitigate the risk and process transactions quickly. With CRIDS’ lending experience, Bansal’s deep pocket and his understanding of technology, Navi ticks all boxes to claim a top slot in the consumer lending space.

Raising capital against equity and debt (from banks) for non-banking financial corporations or NBFCs arm of the consumer lending platform would depend on the performance of the loan book under moratorium, ratings and profitability.

“A significant chunk of the companies in fintech are likely not to tick on the aforementioned parameters due to the pandemic and its impact on borrowers,” said the second person quoted above. “The potential inability in raising equity and debt would also work in the favour of Navi as it has been lending on its own.”

The real test of a lender largely depends on collection and Navi is yet to complete the first cycle for over 95% of its loan book. It has loan repayment tenure ranging from three to 36 months. While Navi is certainly making a quick stride in the consumer lending space, Bansal’s Navi Finserv also deals in two-wheelers, home, small business and educational loans. “In a long haul, Bansal’s horizontal lending play with Navi and its NBFC would be exciting to watch out for,” said the first person quoted in the story.